The nonpartisan Tax Foundation has released a series of new reports showing how raising the U.S. corporate tax rate would be harmful to average workers and families.
Vice President Kamala Harris and congressional Democrats want to raise the corporate tax rate to 28% to make the wealthy and big corporations “pay their fair share.” They claim they want to help middle-class families. But the Tax Foundation research shows that a higher corporate tax rate would have multiple negative effects on average Americans through lower wages, higher prices, and reduced retirement savings.
In a new report, the Tax Foundation writes that the proposal to raise the corporate tax rate to 28% would harm workers in every state. The 28% rate would reduce average wages by nearly $600 for every worker each year, according to an analysis by the Alliance for Competitive Taxation. Workers in a number of states would see average wage losses of more than $700 a year.
The total loss of wages nationwide could be as high as $81 billion a year, nearly one trillion dollars of lost wages for workers over the next decade.
Two other Tax Foundation papers show how a higher corporate tax rate affects the finances of average workers and families. In addition to reducing wages, raising the corporate rate would result in higher consumer prices, “making budgets even tighter for the average American household.” One recent study found that up to half of the corporate tax falls on consumers.
Also, a higher corporate tax rate would reduce investment and harm retirement savings. Sixty-one percent of people own stock, primarily in their retirement accounts. A higher corporate rate would result in smaller returns and lower savings for the average household.
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As the Tax Foundation points out, “Raising the rate to 28% would be a costly mistake, with a large part of the cost falling on workers in the form of lower wages and fewer jobs.” The corporate tax rate, it notes, “hits everyone.”
While corporations may remit the tax to the government, workers and consumers pay the prices over the long run, the foundation says. The cost of a higher corporate tax rate would be felt across the country, and average workers and consumers would be the ones bearing the burden of the tax increases for years to come.
Bruce Thompson was a U.S. Senate aide, assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.